Galaxy Note7 to cost Samsung £2.17 billion

With the announcement last week that is has discontinued production and sales of the Galaxy Note7, Samsung has stated the exploding smartphone is set to cost it up to three trillion won (£2.17 billion or Euro 2.4 billion).

Samsung Electronics announced that it estimates a negative impact of around three trillion won in operating profit from the fourth quarter of 2016 through the first quarter of 2017, due to the discontinuation of Galaxy Note7 sales.

The company already allocated the expected direct cost from the discontinuation of Galaxy Note7 sales in its third quarter earnings guidance revision, announced on 11 October, but it expects the drop in revenue from the discontinued sales to continue to have a negative impact on operating profit for the next two quarters.

The negative impact is estimated in the mid-two trillion won range for the fourth quarter of 2016 and at approximately one trillion won for the first quarter of 2017.

Moving forward, Samsung Electronics plans to normalise its mobile business by expanding sales of flagship models such as the Galaxy S7 and Galaxy S7 edge.

Additionally, the company said it will focus on enhancing product safety for consumers by making significant changes in its quality assurance processes.

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